Hospitals seek Medicare reimbursement

Several Indiana hospitals are suing the Secretary of the U.S. Department of Health and Human Services over a Medicare reimbursement dispute.

Twenty-four hospitals claim the Centers for Medicare and Medicaid Services (CMS), which administers the Medicare program as an agent of the Secretary of HHS, has made inadequate payments to the hospitals. The hospitals include Bloomington Hospital, Indiana University Medical Center, Memorial Hospital of South Bend, and Wishard Memorial Hospital.

The suit, Ball Memorial Hospital, et al., v. Kathleen Sebelius, Secretary of U.S. Department of Health and Human Services, No. 1:11-CV-81, was filed Tuesday in the Southern District of Indiana, Indianapolis Division. The suit says Congress has required CMS to pay hospitals on a prospective basis for inpatient services provided to Medicare beneficiaries. Congress has also mandated an adjustment in prospective payments for hospitals that serve a disproportionate number of low-income patients through the Disproportionate Share Hospital program.

To be eligible for the DSH payment, hospitals must meet a disproportionate patient percentage as defined in the Medicare statute. It’s determined by adding two statutorily defined fractions – Medicare and Medicaid fractions. The proper calculation of the plaintiffs’ Medicaid fraction is at issue. The fraction is made up of the “hospital’s total patient days for such period which consists of patients who (for such days) were eligible for assistance under a State plan approved under Title XIX [the Medicaid Program] but who were not entitled benefits under Part A of this title.”

At issue in the instant case are the patient days for patients covered under the state’s “Hospital Care for the Indigent” program. The program was a part of Indiana’s Medicaid program and for all the years in dispute – which aren’t defined in the suit – was included in the state plan submitted by Indiana and was approved by the Secretary of HHS under Title XIX.

The hospitals argue that the patient days related to the HCI program meet the statutory requirements for inclusion in the numerator of the Medicaid Proxy when determining a hospital’s eligibility and payment under the DSH program. They also claim for the years in dispute that the Secretary of HHS arbitrarily, capriciously, and not in accordance with the law refused to include those days related to the HCI program. The suit claims that HHS has a history of failing to implement the DSH program and refusing to count “Medicaid eligible days” as mandated by law.

The hospitals appealed the decision to the Provider Reimbursement Review Board, which issued an adverse decision to the plaintiffs. The hospitals filed this suit seeking a court finding that CMS and the fiscal intermediary erred in excluding HCI patient days when determining DSH eligibility and payments, that the CMS needs to recalculate the eligibility and payments to include those days, and that the hospitals receive all funds, including interest due.